Infinite Banking
vs.
Stock Market
The only thing for guaranteed in the stock market is that you will need a lifetime supply of TUMS and possibly, a supply of sleeping meds. The fact is you have no idea what you will have in your account ever.
Studies show that the typical equity mutual fund investor has actually lost 1% a year, over the last 20 years, after adjusting for inflation. (Source: DALBAR 2008 Quantitative Analysis of Investor Behavior) Infinite Banking policies grew.
1. Do you receive a guaranteed increase every year?
Infinite Banking
Plans receive a guaranteed increase every year – your statements always have good news, and no ugly surprises.
During 2008, the third worst in history for the stock market, the policies used for the Infinite Banking grew by their gaurantee and even received a divdend! In fact the same thing happened during the lost decade from 2000 through 2009. The market was negative and Banking policies grew!
Stocks and Mutual Funds
If you take a look at the stock market history (you can find it on many websites like Finance.Yahoo.com ), you would see that on August 1, 2009, the S&P 500 Index was still 30.5 percent below where it was when the new millennium started almost ten years earlier.
Over the last 80 years, the Dow was in a stall that lasted 12-25 years 65% of the time (as the stock market timeline charts also reveal).
2. Is your principal protected during a market correction?
Infinite Banking
No loss of principal due to a market downturn. In fact it will grow at it’s contractually guaranteed amount!
Stocks and Mutual Funds
You can lose part or all of your principal in a stock market correction
3. Are your gains locked in during a market downturn?
Infinite Banking
All gains credited to your plan are locked in – they don’t disappear when the market tumbles (the financial guarantees of the policy are backed by the claims-paying ability of the insurer, so be sure to use a financially solid company.
Stocks and Mutual Funds
You can lose part or all of your gains in a market downturn
4. Are your results dependent on luck, skill, or guesswork?
Infinite Banking
You don’t have to be a Prophet or have a PHD to have success with banking. Our clients love the fact that Banking is simple and once the plan is in motion you don’t have to pay attention to the DOW or lose sleep over the bubble burst in real estate. You can focus on the most imporatant things in life, whatever those are for you!
Before making your first premium payment, you can know your guaranteed minimum annual increase, and the minimum value of the plan in any given year.
Stocks and Mutual Funds
Results depend on picking the right stocks, funds or money managers and trying to time it. 80% of all mutual funds and 80% of all investment advisory newsletters underperform the overall market over the long term (Source: Hulbert Financial Digest – July 2009 cover story)
5. Can you use your money without selling your assets?
Infinite Banking
You can borrow the equity in your policy (without selling any assets) and your plan could continue to grow as though you never touched a dime of it, because these policies receive the same guaranteed annual increase regardless of any loans, and any dividends you may receive are not affected by loans (this feature is not offered by all insurance carriers).
Stocks and Mutual Funds
To get access to your equity, you typically have to sell your assets, and you stop getting the interest or investment income they provided. If you have to liquidate assets when the market is down, you’re breaking Rule #1 of Investing (”buy low, sell high”)
6. Can you rely on it for a predictable income at retirement?
Infinite Banking
Because of the contractual guarantees, you will know a minimum amount of income that you can pull at retirement.
Any dividends credited to your plan, would increase the amount of income you can pull out.
Stocks and Mutual Funds
There is no way to predict the value of your investment in 10 years, 20 years, or anytime. Let’s hope that you don’t retire in a year like 2008 amongst many others.
7. Does it “self-complete,” in the event of death?
Infinite Banking
Provides an income tax-free death benefit. It will always be larger than the equity in the plan (until age 121). It will complete whatever plan you where using with the equity in the banking plan.
Stocks and Mutual Funds
At your death, only the value minus tax and fees will go to your heirs. (Roth IRA will go through with out the tax piece).
8. Are your assets protected from creditors and lawsuits?
Infinite Banking
Both your cash value and death benefits may be protected from lawsuits and creditors in many states (check with legal counsel to see what applies in your state).
Stocks and Mutual Funds
Money invested outside of certain qualified plans does not enjoy protection from lawsuits and creditors.